California Pizza Kitchen Seeking Buyer

NEW YORK/LOS ANGELES (Reuters) – California Pizza Kitchen Inc (CPKI.O) is seeking buyers for the restaurant chain, a source familiar with the deal said, sending its shares up as much as 17 percent on Friday.

The chain known for gourmet hearth-baked pizzas and creative salads is valued at just over $500 million based on Friday’s closing share price of $20.74.California Pizza shares rose as much as 17.2 percent on Friday, including the after-hours rise.

Private equity groups have been smelling opportunity in the casual dining sector of late, as financing becomes more accessible and consumers show more willingness to eat out.

It also operates a high-margin frozen pizza business that could make it attractive at a time when high unemployment is forcing diners to eat at home instead of restaurants.

HIGH-MARGIN PIZZA

The Wall Street Journal reported earlier that California Pizza Kitchen has been soliciting interest from potential buyers, including private-equity firms. The company did not respond to a request for comment.

The company had total 2009 revenue of $664.7 million, $7.7 million of which came from royalties from its licensing agreement with Kraft Foods Inc (KFT.N), which handles sales of its frozen pizzas in grocery stores.

In February, the company forecast 2010 earnings of 68 cents to 73 cents per share, below analysts’ average estimate of 77 cents, according to Thomson Reuters I/B/E/S.

It also expected 2010 same-store sales to be flat to down 2 percent.

According to its 2009 annual report, it has long-term debt of $22.3 million.

California Pizza Kitchen shares rose over 2 percent to $21.20 in extended trading, after closing up $2.56, or 14 percent, at $20.74, on Nasdaq.

(Reporting by Megan Davies and Michele Gershberg in New York and Lisa Baertlein in Los Angeles; Writing by Alexandria Sage;editing by Carol Bishopric)

1 Comment

[…] According to Reuters, the pizza chain has been soliciting offers, as rivals sign buyout deals with private equity firms. The news was first reported by The Wall Street Journal, which said that California Pizza Kitchen had approached P.E. shops to gauge interest in an acquisition. […]